An average return on a rental property is 4% per annum. Add to this the capital growth of most property of 7% to 10% per annum and you have 11% to 14% per annum.

Furthermore all you need to invest in a property is a minimum of 10% as the deposit, which could be say; $40,000 to get this return, because you are leveraging your money.

So, I will ask you the simple question; “Why look at anything else, other than property?

A Financial Advisor will say; you need to have a balanced portfolio. It’s interesting that a Financial Advisor makes no money if you invest in property.

Anyway,I will leave it at that and be in touch next week with some BIG news.

As I said in my previous blog post this year I will be harping on creating wealth through property, because it saddens me to see so may people missing out on what is ‘easy money.’ It is easy when you know how and if you do not know how; all you have to do is ask by emailing bertram@bertramdaniel.com.

I happen to live across the road from the Doncaster Westfield Shopping Centre and therefore can see the comings and goings from my study window, where I do spend a bit of time. I can tell you that many weeks prior to Christmas the traffic build up was very noticeable and now today being ’Boxing Day’ it is a madhouse out there, with the stream of cars unabated since early morning and still going at midday.

So why does this bother me, you might ask and that is a fair question. Perhaps I feel that there is a strong element of people being controlled by advertising and marketing and that we have become a consumer society. So what is wrong with that, you could ask.

Well, there is no ‘right’ and ‘wrong’ or ‘good and ‘bad,’ because as Buddha said “It is what it is,” my question is simply this. “Is there a better way?”

This consumer madness costs money. Plenty of money and is this the best way to spend it! Do people stop to consider the fact that most Australians spend 110% of their income, which is why credit card debt is so high, which is mostly around 20% interest? Do people realise that 85% of Australians retire on less than $35,000 p.a.

We live in an affluent country with good incomes compared to many other places and yet people retire on a pittance and have to surely modify their lifestyle from what they were used to. And the sad part is that it does not have to be like this.

If they thought about it and considered what they were doing; spending money on ‘stuff’ instead of looking after their future, would they still be doing this?

What I do know is this; if they saved money and instead of spending 110% of their income and spent only 90% and saved 10% they would have the opportunity to invest in the steadiest property market in the country; Melbourne! (Anyone read the book ‘The Richest Man in Babylon’?)

According to the ABS only 15,000 people own more than 7 investment properties in Australia. This is crazy. Even if we tripled that figure to 45,000 it is still crazy.

The fact is that property in Victoria or more particularly Melbourne doubles every seven to ten years and has done so for the past 100 years. So why not take advantage of this?

I guess this is why it bothers me; because after over 40 years in the real estate and property business I know that it is so easy to be wealthy by investing in property and it pains me to see that so many people waste this opportunity and blow it on ‘Things’ and waste that chance to do what I help and assist people to do and that is; ‘Create Wealth through Property.’

Have you wondered how many investment properties you would need for financial freedom?

I have found that whilst most property investors hope to one day replace their personal exertion income with cash from their investment properties, most don’t have a strategy to achieve their goal. Furthermore the sad truth is that most people do not even think about doing this or for that matter even consider financial freedom; or we would not have 85% retiring on less than $35,000.

Here is a brilliant example of this:

I was speaking with a friend of mine the other day and it was suggested that I should speak with the son about investing in property, as he was earning very good money, but blowing most of it on an expensive lifestyle and not saving. This of course is not unusual for many young people and I said that I would be very glad to chat with him.

My next question was; “So what property have you invested in?”
Answer; “None.”

Here is someone with a good income, living in a house worth about $950,000. So I my next question was; “What is your mortgage?”
Answer; “$50,000.”

So let’s look at this as a case in point. My friend has equity of about $900,000 in their home, which they could easily utilise to grow their wealth and yet they have no investments towards creating wealth or a nice nest egg to retire on!

There would be a number of reasons for this, most of which I have touched on ad nauseam. However, the main reason is ‘lack of education’ in creating wealth through property. This is a subject close to my heart and I promise that I will be offering to educate you on this subject next year.

So, I asked a mortgage broker (http://ozloanmates.instapage.com) that I know about this case, to explore the possibilities and it would appear that my friend (let’s call the friend John) could easily borrow around $550,000 and much more; if the rental was factored into the mix.

So John could go out and purchase a residential property (for say $550,000) that would have a rental return of 4%, which translates to $22,000 pa or $1833 pm before costs or say $19,500 after costs or $1625 pm after costs. The repayments will be $1833 on an interest only loan. The difference is $208 per month or $48 per week.

Note that I have not factored in tax deductions for depreciation, building allowances etc. etc. which would make it a positively geared property or let’s say neutrally geared property, that is increasing in it’s value by 10% per year on average. That being the case in 10 years the property is worth around $1,000,000 and will be returning $40,000 pa.

The possibilities are endless, because John could even buy 2 or 3 properties given the $900,000 equity in the home. I could go on and on, but the simple question is how many people are sitting on good equity in their home and not using it to increase their wealth. All it takes is a phone call or an email to open the doors to new possibilities.

So do yourself a favour and at least start thinking about it. They do not teach you this stuff at school and be mindful of property spruikers flogging their properties and I promise that I will be doing more to educate you on the endless possibilities of wealth creation through property.